Defining your market fit — rule one: Don’t try to be everything to everybody
Even if it were 100% true for a particular product or service, investors do not like to hear that your target market is ‘everybody.’ Concepts sometimes evolve and as they do, target markets can either shift from one segment to another or grow to encompass additional market segments. That is perfectly fine but from the outset — particularly when you are seeking outside investors — you must have a clearly defined target market.
Remember, when you try to be everything to everybody, you succeed at nothing. Regardless of whether you are targeting business-to-business (B2B) or business-to-consumer (B2C) markets, each customer group has its own unique set of interests and needs. What is important to one group can be meaningless to another. Diverse customer groups do not share the same set of problems. Teen girls have different problems and priorities than middle-aged homemakers. Likewise, the challenges faced by small businesses are not the same as those faced by large corporations. Each of these different customer groups will make buying decisions based on criteria that are unique and specific.
If you do not clearly define a specific target customer base for your product, service or technology, then you cannot fully understand the specific features and benefits that will be of interest to these potential customers. This is particularly important for startups or early-stage firms seeking outside investors. Investors do not invest in businesses that do not clearly define the specific customer segment(s) their product or services will target.
When customers have specific problems, they seek out products, services or technologies that can resolve their particular issue. Moreover, the higher the level of confidence they have in the solution, the greater the likelihood that they will purchase that solution. If you are in need of a general checkup, you go to a generalist, but when you have a specific medical issue, you seek a professional with expertise in your particular area of concern.
Regardless of the size of the company, trying to be everything to everybody is an ineffective strategy that only serves to weaken your position and destroy your credibility.
Not even Wal-Mart, the world’s largest corporation, can successfully tackle that approach. A number of years ago, Wal-Mart endeavored to expand its customer base beyond its value-conscious core to include more upscale customers, like those that shop at Target or Kohl’s. Essentially, Wal-Mart wanted to be the low-priced leader and be hip and fashion-forward. The company even moved its fashion buyers from the headquarters in Bentonville, Arkansas to shiny new offices on Broadway in New York City.
Unfortunately for Wal-Mart, shoppers were not impressed, and the company eventually retreated from that strategy, relocating the buyers back to their home base in Bentonville. The problem was that these two cultures clashed mightily and neither consumer base (value-conscious or somewhat upscale) was happy.
Wal-Mart’s strategy of trying to be everything to everyone did not turn out well. Existing customers were displeased because many of their low-cost favorites were replaced with hipper, costlier goods. Meanwhile, the more upscale customers were not interested in shopping at Wal-Mart. They never believed that Wal-Mart products could actually be either hip enough or fashion forward enough to entice them to change their shopping habits.
As you grow, you may find that your product (service or technology) can readily be adapted to meet a new market segment. If so, you may want to consider launching it as a separate product or brand. For instance, several years ago I helped a woman land her specialty skincare cream on the shelves of Wal-Mart, Walgreens and other major national and international retailers. Along the way, we found that the product could be especially appealing to new moms and dads because the cream was particularly effective at alleviating some common skin conditions that irritate babies and toddlers.
But rather than try to be ‘everything to everybody’ we decided that the best approach to reaching the new market segment was to launch the product under a separate brand with its own marketing campaign geared towards this new target customer. The original product brand already had a relatively long list of benefits and we were concerned that simply adding to the list would be ineffective and even potentially damaging to the brand.
That strategy was successful because we understood the needs and interests of different customer groups. Armed with this knowledge, we were able to create a new brand that marketed the existing product formulation to new parents. The brand message was customized to specifically speak to the needs and interests of new moms and dads. Since the other benefits were not of interest to them, they were not emphasized. Had we simply tried to market the existing brand to new moms and dads, the message would have been lost and our market expansion efforts unsuccessful.
The lesson here is that businesses of all sizes must understand each of the distinct market segments that their products or services target. The target markets that hold the greatest potential for traction and growth should be the focus. Branding and marketing strategies should be specifically geared to reach those customers. This is critical for businesses that are seeking outside investment. Later, during growth stages, new market segments can be explored, with appropriate strategies for reaching each being developed and executed.
